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Webinar: How to future proof your Council Tax Reduction Scheme for Universal Credit

As Universal Credit is implemented, it's crunch time for local authorities. Now is the time to make bold changes to council tax support schemes so the most vulnerable people are protected from poverty, whatever Universal Credit means for them. Yet knowing who those people are is a huge challenge.

Policy in Practice has worked with 22 councils to model options for Council Tax Reduction Schemes, taking into account the impact of Universal Credit on households. These detailed, evidence based assessments are used by officers and members to make informed policy decisions, as well as hold consultations with stakeholders.

View these slides to learn:
- how to model the impact of Universal Credit in your CTR scheme
- what common scheme options other councils consider
- how local priorities can be supported within budget
- why it's important to change your CTR scheme in the lead up to Universal Credit roll out

What would your main objective be if you were changing your CTR scheme?

Reduce cost of the scheme i.e. the cost of the benefit/discount Reduce administrative costs for the authority Reduce (or avoid increasing) council tax arrears and the cost of collection Align with Universal Credit Reduce poverty

Didn’t have expertise internally UC rollout Wanted objectivity for members – internal process – where did members come into it?

Q: We can do a cost analysis so is an impact analysis really necessary as well? Q: At what stage in the process doe councils do an impact analysis? Q: Does an impact analysis provide the information required for an equalities assessment and for consultation? Q: How many schemes do most councils model?

Webinar: How to future proof your Council Tax Reduction Scheme for Universal Credit

9.
Trends since 2013 - New Policy Institute
evidence
• From April 2017, 264 schemes include a PERCENTAGE CUT,
or minimum payment, up from 259 in April 2016, and 229 in
April 2013. Usually pre-assessment (e.g. 80% of liability
maximum) though some apply the % cut after assessment.
Everyone required to pay at least some council tax
regardless of income, unless protected.
• 214 councils have reduced or REMOVED THE SECOND
ADULT REBATE, 16 more than April 2016, and 40 more than
April 2013.
• 100 councils have introduced a BAND CAP which involves
limiting the amount of benefit received in higher value
properties to the amount provided to those in lower value
properties, 15 more than the previous year and 41 than in
April 2013. The most common band cap applied is D.

10.
Trends since 2013 - New Policy Institute
evidence (2)
• 98 councils have LOWERED MAXIMUM SAVINGS LIMIT (the
savings limit over which one is no longer eligible for Council
Tax Benefit), 14 more than the previous year and 41 more
than in April 2013. Most reduced the threshold to £6,000.
• 58 councils have introduced a MINIMUM CTR
ENTITLEMENT , 13 more than in April 2013. A minimum CTR
entitlement of £5 per week would mean that claimants
entitled to less than this would receive nothing.
• 25 councils increased the INCOME TAPER (the amount by
which support is withdrawn as income increases) from the
CTB rate of 20p per £1. (3 councils lowered the taper).

16.
Other considerations
• Financial pressures likely to increase – funding for CTRS
now part of business rates retention scheme
• Policy for those at or over pension age not likely to
change soon so will still have to administer two
schemes
• Perhaps now is the time to move away from pseudo-
CTB schemes?
• Clear advantages in some form of direct link to
Universal Credit but doesn’t have to mirror the
assessment
• No scheme is perfect but broad-brush discounts with
some discretionary back-up seem a good way forward

20.
Roll-out of Universal Credit
Advantages
• Chance to introduce a new scheme in a gradual manner
• Another agency is undertaking the assessment – the council can use this
• Can use the CTR scheme to support or mitigate the impact of Universal Credit
Challenges
• Monthly re-assessments
- de minimus
- set assessment periods
- bands of similar income so no need for re-assessments
• Perceived fairness of having 2 schemes

21.
Simple solution: keep the default scheme
What is it?
• Similar to current scheme but UC Max replaces the “Applicable Amount”
• Income for UC purposes PLUS UC replaces income
• No earnings disregards
General outcomes:
• This will usually cost slightly less than the legacy benefit scheme.
• For households not in work there is likely to be no difference in support
• For many earning households they will receive lower CTR as they will be receiving higher UC.
Good news for LAs!
BUT……

22.
This does not maintain the status quo – there will be winners and losers
In particular groups that receive lower UC than legacy benefits AND receive lower CTR.
This will happen if :
• the assessment of “needs” is lower under UC than under legacy benefits because this also
reduces the income side of the equation (e.g. ending disability premiums)
• Income that is taken into account is higher under UC than legacy benefits (e.g. self employed
and the minimum income floor)
Simple solution: keep the default scheme

23.
Default scheme
Biggest losers
• The self-employed
• Working households containing a
person with a disability
• Working households in receipt of ESA
support
Winners
• Income from boarders: higher UC
and higher CTR

24.
The default scheme
Advantages
• Taper rate so gradual withdrawal of
benefit
• Assessment process is known
• Already drawn up and just needs
amending for local minimum etc
Disadvantages
• Some groups that lose out under UC
also lose out under the default
scheme
• Monthly change in UC = high volume
of reassessments
• Little admin cost savings
• Difficult to explain

25.
Banded Scheme
Biggest losers
• Those with high needs
• Disabled
• Multi-person households
Winners
• Single person households
A one person household with £250 per week may be fine. A four person household with
£250 per week may need assistance

26.
Banded Scheme
Advantages
• Easy to explain
• Flexibility
Disadvantages
• Unlikely to make administration
savings as complexity may be the same
as current scheme
• Re-assessment as income crosses
bands
• Affects vulnerable groups and families

27.
Discount scheme
Biggest losers
• Those on out-of-work benefits if
discount is set at a a level that is cost
neutral
Winners
• Working households

28.
Discount scheme
Advantages
• Easy to explain
• Admin savings
• Only requires reassessment if UC ends
or starts
• Those hit by UC will be protected from
lower support in CTR
• Flexible
Disadvantages
• Fairness? Wide disparity of incomes
will receive the same support
• Will need an income cut-off to
contain claimant numbers

29.
Banded discount scheme
Biggest losers
• Those on out-of-work benefits if
discount is set at a a level that is cost
neutral
Winners
• Working households

30.
Banded discount scheme
Advantages
• Easy to explain
• Admin savings
• Only requires reassessment if moves
into or out of work or UC ends or
starts
• Those hit by UC will be protected
from lower support in CTR (self-
employed and disabled)
• Flexibility
Disadvantages
• Will need an income cut-off to
contain claimant numbers

31.
Conclusion
Universal Credit is coming and the status quo will not be neutral
The best scheme for an authority will depend on:
• Demographics
• Current scheme
• Political climate
• Overarching policies and local priorities
The effectiveness of your scheme can only be understood through detailed cost and
social impact analysis